19 Oct 2012
The importance of achieving innovation in the workplace, and particularly in Research and Development (R&D) departments, is nothing new. Every year is ‘the year’ to get it right and 2012 is no different. For many organisations this will be the fourth consecutive year of annual reports confirming slow or declining revenues and margins. Many senior executives are, as a result, feeling pressure to demonstrate their ability to turn things around in 2013. Within R&D-led organisations this will largely stem from their ability to deliver commercially successful innovation.
Identifying innovative investment
In industries with high regulatory barriers and long R&D cycles the investment risk profile of new projects has led to the adoption of rigid and robust processes, with clear decision gates. The aim of these processes is to use data efficiently and identify and halt potentially unsuccessful projects as early as possible, the so-called ‘fail fast, fail cheap’ philosophy. Often, the unfortunate result is that unfamiliar technologies, markets and approaches are discounted as too high-risk and true breakthrough innovation is side lined by a more risk-averse, evolutionary approach to innovation projects. The same can take place in industries with shorter R&D cycles, where product development proposals with lengthy delivery cycles are put aside as too risky or unfamiliar to tackle successfully.
While the approach and management of innovation programmes are largely dependent on the size, industry, culture and business model of the organisation, there are often clear benefits to be gained from adopting a more revolutionary approach to innovation. Many companies such as Apple, Dyson and GE have already done this with sometimes industry-changing results, and with little to no extra cost.
Accelerated innovation departments
In an effort to foster disruptive innovation without completely restructuring existing R&D departments, some companies have created entirely separate divisions with the sole objective of delivering breakthrough ideas and products. These divisions pursue projects that by their very nature wouldn’t fit into existing R&D streams. The appeal of this approach is demonstrated in the growing number of organisations setting up accelerated innovation divisions. The challenge will be to avoid the perception that this is a single silver bullet solution; promoting innovation across the organisation will still be required.
Another approach taken by companies to promote creativity is ‘Open Innovation’; a phrase coined in 2003 by Henry Chesbrough, a professor at the University of California, Berkeley. While its popularity as a buzzword has peaked and troughed over the years, the premise that companies should use both internal and external ideas to advance their offerings has been widely embraced across industries. This has also been expanded to include a new contributor: the customer. Some Open Innovation departments have created crowdsourcing portals inviting the public to contribute ideas on how to improve or introduce new products into the company’s portfolio.
Harnessing internal knowledge
Whether companies create separate divisions, subsidiaries or external platforms to capture ideas, internally the challenge continues to be how to give employees the space to drive innovation while constraining the process in a healthy way. This starts by recognising and then harnessing the expertise and thinking across the organisation so knowledge and ideas are not stuck in divisional silos. There are specific internally created challenges to avoid when trying to achieve innovation in the workplace, and these include a number of direct factors.
Companies often fall into the trap of not only being structured, but also restricting thinking in internal silos. This stems from different groups having independent targets, budgets and constraints, and therefore tend to operate in an insular fashion. This can lead to sluggish product development that fails to answer key questions and internal conflicts, ultimately having a negative impact on the business.
Giving employees the opportunity to share ideas and experiences across departments, skill areas and/or market sectors can be a key source of innovation. Assembling multi- disciplinary teams from the outset of an R&D project improves creativity and reduces time-consuming conflicts across teams. Using external consultants to help bridge gaps and creating common language platforms between Marketing and R&D, Scientists and Engineers or Life Scientists and Mathematicians can also bring insights of best practices from other companies and industries.
Managers often have very short-term targets to achieve, and therefore employees consequently think about what new products or services to deliver with very fixed horizons. Projects should meet both short and long-term objectives, and individual projects should definitely be encouraged as part of the company portfolio. Risk can be balanced across projects; ensuring low-hanging ideas are captured as well as developing ground-breaking ones. Technology landscaping and mapping can help structure thinking and understand what is feasible both in the short and long term. It is also important to be clear about where the company wants to be in the next five to ten years.
Too many assumptions are made about target market needs and R&D managers are tempted to do only enough market research to confirm pre-conceived perceptions within the team. To be innovative, it is vital that businesses know their market, the target consumer, the stakeholders involved, and can identify the enabling technologies which allow the business to realise new product ambitions.
Inappropriate levels of investment
Some R&D groups limit blue sky thinking by not adequately promoting creative thinking or employee involvement in strategic innovation projects. In contrast, companies cannot throw unlimited funds at innovation and leave it unchecked, or the incentive to create concrete proposals is lost.
But ensuring that the right amount of investment is available to innovate is fundamentally critical, whether that be time, resource or through hard cash. Making sure that this activity is reported on is key. Employees need to know that if they are given spare time to explore new ideas or concepts, they will be expected to report on their activities. This is also good practice as failures in one area may produce new ideas or successes in another part of the business.
Innovation in large organisations is definitely more likely to happen systematically if the right process and culture is in place. Whether you are looking for ideas internally or externally – encouraging the exchange and sharing of talent – knowledge across teams can create a more dynamic and agile business environment. This approach will also help evaluate and rationalise new innovation ideas, identifying the short and long-term opportunities that will ultimately have the highest potential return to a business, without undue risk exposure.
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